Were payments made to Indians, New Delhi asks AgustaWestland

The Defence Ministry on Thursday asked Italian Finmeccanica’s subsidiary AgustaWestland U.K. to “categorically state the clear position, in view of current developments, indicating specifically if any financial transaction has taken place with any Indian individual/entity” violating the “Integrity Pact” or any other terms and conditions of the contract for purchase of 12 VVIP helicopters. This comes two days after it ordered a CBI inquiry into allegations of bribery and warned of cancellation of the Rs. 3,600-crore contract

Amidst allegations of kickbacks and undue influence reportedly used to bag the deal, the Ministry warned AgustaWestland of “strict action, including cancellation of contract, recovery of payment, blacklisting and penal action against the vendors.”

The Ministry, under attack since allegations of kickbacks to the tune of Rs. 363 crore surfaced, has already put on hold all further payments to AgustaWestland, which has so far delivered three choppers, meant to ferry VVIPs.

The delivery of the remaining nine choppers is also said to have been kept on hold.

As its political opponents sought to put the UPA government in the dock, the main Opposition BJP demanded a Supreme Court-monitored probe. Senior BJP leader and former Defence and External Affairs Minister in the NDA government Jaswant Singh came out in support of the former Air Chief, S.P. Tyagi, saying allegations should not be made before the truth became known.

Italian prosecutors have told a court that his three cousins were allegedly paid bribes to the tune of Rs. 72 lakh to get the requisite specifications for the tender changed. One of them, Sanjeev Tyagi, rejected the charge as “absolutely baseless.”

Parameters changed to prevent single-vendor

Mr. Singh admitted that the parameters for purchase of these helicopters were changed on the directions of the then National Security Adviser (NSA), Brajesh Mishra, but defended the decision saying it was done to avoid a single-vendor situation. He favoured an expeditious and thorough probe into the allegations of payment of kickbacks.

In a 35-point fact-sheet on acquisition of AW-101 choppers for the Indian Air Force, the Defence Ministry reiterated that the government “is determined to take all possible legal and administrative action against the guilty parties and accordingly has ordered a thorough probe by the Central Bureau of Investigation.”

Giving in detail the timeline of acquisition of AgustaWestland choppers, the Defence Ministry said the proposal was approved by the high-power Cabinet Committee on Security (CCS) on January 18, 2010 and the contract was concluded for the supply of 12 AW-101 VVIP helicopters on February 8, 2010.

Specifications change helped AgustaWestland

Pointing out that it followed the established procurement procedure transparently at all stages, the Ministry said that security aspects as required by the elite Special Protection Group (SPG), which provides security to the Prime Minister and the IAF, were fully taken into consideration.

“The role of the Prime Minister’s Office which began in 2003 was to ensure that security, communication, and other requirements of VVIP security were taken care of and the helicopter for VVIP use is selected on the basis of broad-based Qualitative Requirements (QRs),” the five-page fact-sheet, issued by Defence Ministry spokesman Sitanshu Kar, said.

It said that at a meeting convened on November 19, 2003 by the then Principal Secretary to the Prime Minister, he observed that his main concern was that the framing of the mandatory requirements had led into a single vendor situation. It was also noted that the PM and the President rarely made visits to places involving flying at an altitude beyond 4,500 metres. It was decided at the meeting to change the mandatory requirement for operational altitude of 4,500 metres, making the higher flying ceiling of 6,000 metres and a cabinet height of 1.8 metres desirable. The changes were incorporated after deliberations between March 2005 and September 2006. At that time, Brajesh Mishra was Principal Secretary to the PM.

After evaluation by the technical committee, proposals of Sikorsky of the U.S. and AgustaWestland were recommended for field trials of their helicopters. While field evaluation trial of AgustaWestland was carried out in the U.K, those of Sikorsky were conducted in the U.S in January-February 2008. The trial team submitted its report in April 2008, recommending AW-101 helicopter of AgustaWestland for induction into service. In 2009, the Contract Negotiation Committee (CNC) recommended conclusion of the contract at a negotiated price of Euros 556.62 million.

The Ministry said the contract with AgustaWestland included specific provisions against bribery and the use of undue influence. In addition, the firm signed an “Integrity Pact” with the government which is valid from the date of signing and extends up to five years or the complete execution of the contract whichever is earlier. Under this pact, the bidder commits itself to taking all measures necessary to prevent corrupt practices, unfair means and illegal activities during any stage of the bid or during any pre or post-contract stage. “Any breach of the pact entitles the buyer to take action, including cancellation of the contract without giving any compensation.”

Taking note of a report of February 2012 in The Hindu, quoting Finmeccanica which stated that its subsidiary was not involved in “any irregularity in the deal,” the Ministry said that it sought a factual report from Indian embassy in Rome.

Subsequently, the Defence Ministry received more than one communication from AgustaWestland confirming that the statements in the press were “completely unfounded and have been issued with malicious intent” and that “no commissions whatsoever were paid” in the case.

Stressing that the MoD consistently pursued the matter through the Ministry of External Affairs since foreign governments were involved, it said “as soon as information was available of one concrete step having been taken by the concerned foreign investigative authorities, namely, the arrest of Giuseppe Orsi, CEO of Finmeccanica on February 2, 2013, the MoD handed over the case to the CBI for investigation and put on hold all further payments to AgustaWestland.” The Indian embassy in Rome has also been requested to provide the factual position and any other relevant information.

Meanwhile, Italian news agency ANSA, in a report from Rome, said Finmeccanica named its new president and chief executive officer Alessandro Pansa, replacing Mr. Orsi, who is under investigation. AgustaWestland's current CEO Bruno Spagnolini was also put under house arrest.

Why did the government decide to not use the indigenously developed HAL "Dhruv"? Ok, it was developed jointly with MBB but it is made in India and has a unit cost of 40 crores. Even if outfitting each helicopter for our VVIPs (is something wrong with using VIP instead) doubled the price to Rs. 80 crores, this is still way below the 300 crores being paid for each Augusta-Westland helicopter. Let's round this out to Rs.100 crores for each HAL Dhruv, so the taxpayer would pay Rs.1200 crores to HAL instead of Rs.3600 crores to Finmeccanica. A savings of Rs.2400 crores! Imagine that? Don't forget, India's technological base also benefits by working on this high tech machine. But of course, that isn't going to happen. How else with our Political and Military establishment going to make their chai-paani?

from:
Rahul Garg

Posted on: Feb 17, 2013 at 19:02 IST

Isn't this an idle question when so much of information about the bribery is in the public domain? Silence may be a better option for the government!

from:
K.Vijayakumar

Posted on: Feb 16, 2013 at 14:15 IST

All defence deals get approved only after the supplier bribe the Govt, bureacrats and maybe even Senior officials in the Armed forces. There is nothing new in this and no one should be shocked or surprised. Everyone's palms are well greased to get the deal done and at a loss to tax payer. This Defence Supplier ->Middle man -> Bureacrats -> Ministers -> Armed forces is a well oiled machine. Without these bribes ,how can the Govt officials, Ministers, Politicians survive on petty change they get from Govt as Salary?? It is such a joke? This will not change unless there is a really BIG revolution lead by honest people like Anna and Kejriwal. As we speak about this scandal , there are tons of such deals happening under the table right now and our PM is sadly helpless and his hands and mouth shut by Congress party and its leaders.People should be shocked if the Guilty ministers, middle men get arrested and sent to jail.

from:
Jayaram A

Posted on: Feb 16, 2013 at 02:52 IST

"Were payments made to Indians, New Delhi asks AgustaWestland" WoW!! That's a good question. Which New Delhi Indian asked it? Probe this thing a little and we will end up with all the guys who actually took the money!!

from:
Manjunath

Posted on: Feb 15, 2013 at 16:23 IST

It is a pity that the balance order has been cancelled as if to assume that the government has taken a swift action. This is outrageous as no proper explanation has been given for the money already paid against the value of the choppers received. Please note that we have received only 3 choppers worth 900 crores rupees, whereas the payment already made was 1,260 crores (35% of 3600 crores). When would the government get back the balance 360 crores rupees and also the prorata bribe money applicable for the three choppers? God only knows the answer and it is a pity that no one is talking about this. If there are no technical issues with the chopper, why cancel the order? Instead, focus the investigation to find out as to who received the bribe and take appropriate action for recovery of the bribery amount, claim the damages and also seek reduction in price for the remaining 9 choppers. Also, the government should take serious action against all the culprits. Otherwise, no one can save us

from:
Partha

Posted on: Feb 15, 2013 at 15:42 IST

Why only Indians? Why not Italians and the British? Every payment made outside the contract is a violation of the contract irrespective of to whom it is made.

from:
Hilary Pais

Posted on: Feb 15, 2013 at 15:22 IST

What does Mr. Jaswant Singh meant by saying "We should not make wild allegations against a former air chief"? Is the Armed forces holy cow as believed of? If somebody observe carefully it is clear that perhaps armed forces are the most corrupt institution as of now, the reason being external audit is not allowed sighting security reasons. Earlier cases did not came to public domain as the news media were not having access to the happenings in armed forces. Of late many of the corruption case are out through many sources. It seems that more or less all high officials in the armed forces having decision making authority are a part of all corruption in their domain. Mr. Jaswant Singh himself was an official in the armed forces, so he must knowing extent of corruption in it. So to defend someone who is having a dubious deal itself is crime according to me. I think BJP must kick him out of the party immediately for this

from:
Balachandran Nair V

Posted on: Feb 15, 2013 at 14:20 IST

Why would the government think that payments were made by the Italian company to any Indian? Could it not be routed via other nationals and finally ended up into Indian national's account in some other country?

from:
Gopal

Posted on: Feb 15, 2013 at 10:38 IST

'Were payments made to Indians?' Let me see. The company was Italian/British. India was the buyer, represented and executed by, let me make a wild guess, some Indians. Could it be, or!!! Now, if the company had to bribe anyone at all to sell those choppers, who could it be?! Americans! No, wait a second. Could be, but, can't be sure. Ahh, this is a tough one. Nope, beats me!!

from:
subramaniam

Posted on: Feb 15, 2013 at 09:26 IST

Bofors II, huh! Start of the the smokescreen? Investigation to continue for couple of decades?

from:
Murali

Posted on: Feb 15, 2013 at 08:48 IST

They should also ask if any funds were deposited in Swiss banks for Indian persons, Indian entities, or for the benefit of Indians who helped in facilitating the award of the contract for the helicopters.

from:
Som Karamchetty

Posted on: Feb 15, 2013 at 08:09 IST

Is there any doubt that our senior officers have not taken money?Investigate in detail how they are living and from where they have got wealth,it will be clear that they have got some black money!
Why is the government feeling shy to create a website where every government functionary is bound to place their property details for observation by any person? What can be the privacy in it when the person is a public servant?

from:
atis

Posted on: Feb 15, 2013 at 06:59 IST

Government statement asking the company to state if any Indian entity was involved is not correct. Payment to any entity outside of the main contract is violation of the contract. Besides, money trail has been established. Also, any specification which results in a single supplier is dangerous. It was ok to have it corrected in 2003.

from:
Krishnan

Posted on: Feb 15, 2013 at 04:25 IST

The defence minister has to resign as he has jeopardised the security of the country, overlooked corruption and sought substandard helicopters.

from:
Shyam

Posted on: Feb 15, 2013 at 03:58 IST

When Govt. of India will make the defense purchase transparent? Public is frustrated from the scams day by day. It's high time now to fix a deadline for making such kind of purchases transparent and logical.

from:
Amardeep

Posted on: Feb 15, 2013 at 01:46 IST

I remember that sometime last year reports started appearing in the media about irregularities in the helicopter deal. The Govt could have ordered a probe at that time to determine the veracity of those reports. However, no action was taken. Now that the Italian Govt has taken action based on its own findings the Govt was left with no alternative but to order a probe by the CBI and issue strong statements to the effect that action taken against the guilty. We don't know a this stage but it will be difficult for it to shield all the guilty given that the matter has been taken up Italy.

from:
Krishna

Posted on: Feb 15, 2013 at 00:46 IST

The country has a list of scams for the past so many years, but when are we going to realize we need to develop our own industry that will not only save the country from face saving as well we will take step forward on the concepts of self reliance, generation of employment as well saving on foreign exchange if we promote our own manufacturing segment. For over Sixty years we have to see in which segments the country has put a step forward.It appears that we are under the grip of a lobby that abstains us from becoming self reliant in various segments we must try to come out of it that will help us grow faster and provide more opportunities to our younger generation as well protect us from face saving in the international arena.

from:
Kuldeep Saxena

Posted on: Feb 14, 2013 at 22:41 IST

What's the point in banning the company without making our political establishment to follow morals and rules? If it's not Finmeccanica, there are others who are also aware of the bribing culture in India. what about the person (Indian) who took the bribe?? The law is so strictly enforced towards ordinary citizens who take Rs.100 as bribe however if you do it in crores, you get immunity. This is such a mockery of democracy!!

from:
John

Posted on: Feb 14, 2013 at 20:07 IST

This reminds me of Vadivelu's Soonapanaa comedy. The convict pleading the beneficiary to speak up reminding them about the consequences before hand.

from:
Karthik

Posted on: Feb 14, 2013 at 19:49 IST

This extract from the article "With the VVIP choppers deal facing charges of kickbacks, the government on Thursday formally asked Italian firm Finmeccanica to state whether any money was illegally paid to any Indian entity or individual amidst its warning of legal action including blacklisting of the firm." is just wonderful. Perhaps this is the new approach to honest investigation, Indian Government style; Just Ask the Suspect. All investigations will be concluded and guilt established in record time. Congratulations. Another Neta approach to getting rich without risk.

from:
Anil Khan

Posted on: Feb 14, 2013 at 19:36 IST

Why is the government asking Finmeccanica for information? Instead,ask the Italian prosecutors to share their findings!